For people who are drowning in credit card debt it can so often feel like there is no way out. Making the minimum payment each month means that they aren’t going to get very far. Meanwhile, the interest is building on the cards. And building. And building.
Debt experts will tell anyone that there is no easy fix for getting out of debt, and they are right. But there are smarter ways than others to go about it, and one thing that needs to be considered is a debt consolidation loan. We know what you are thinking, a loan to get out of debt? Let us explain…
What Is Debt Consolidation?
Debt consolidation is when someone rolls high-interest debts like credit bills into a single payment — usually with a lower interest rate. That lower interest rate is what is key because that is what will ultimately reduce the total of what someone ends up paying on their debts. Reducing the total means they’ll pay less overall and be able to get out of debt faster.
For a lot of people this is ends up being a real life saver. Let’s say someone takes out a loan for two years, pays off their credit card debts, and then makes their loan payments on time every month. In that scenario that person knows that they are going to be out of debt in two years. The same can’t be said for someone making payments on a credit card every month.
So How Much Can Someone Save?
The easiest way to figure out how much you can save is to head over to Fiona, a search, comparison and recommendation engine for personal loans.
It’s really simple on Fiona to figure out what loans are available to you. Fill out a few simple questions about yourself (like, really simple) and then get matched with personal loan offers in less than 60 seconds.
That’s when you’ll see a list of lenders (Fiona works with all of the big lenders, too), the interest rate you are eligible for, how long the term of the loan is for, and also what your monthly payment will be.
From there you will be able to see how much money you will be saving by consolidating debts. Seriously, Fiona is one of the easiest ways we’ve found to figure this out.
So, answering the question, can you really save thousands by consolidating debts? The answer is yes, especially if you have a credit score above 660.
A Few Takeaways…
The first thing you are going to want remember when consolidating debts is to search for a loan with a lower interest rate than the one you have on those credit card debts. Again, we can’t swear by Fiona enough for figuring this out easily and quickly.
The second thing to remember after taking out a debt consolidation loan is to not just start charging things on a credit card with abandon. That’s what got you in this mess to begin with.
It won’t be easy, but we swear there is light at the end of the debt tunnel if you stick with it!
Feature Image: Twenty20